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Jan 11, 2018 03:19 PM IST | Source: Moneycontrol.com

China plans "orderly" exit from bitcoin mining, cracks down on miners' power usage

The development comes after multiple reports of the Chinese government planning to limit electricity supply to bitcoin miners.

Moneycontrol News @moneycontrolcom

China, which accounts for over 70 percent of the Bitcoin network’s collective hash rate, is mulling stopping mining operations.

According to a leaked official document that saw the light of day on Twitter, the Leading Group of Internet Financial Risks Remediation, which is China’s top internet finance regulator, has asked local governments to “guide” bitcoin-mining operations towards an “orderly” exit from the business.

The development comes after multiple reports of the Chinese government planning to limit electricity supply to bitcoin miners, who are infamous for consuming extremely large quantities of power.

Also Read: Energy consumed by bitcoin miners around the world is more than over 150 countries

“Currently, there are some so-called ‘mining’ enterprises that produce ‘virtual currencies.’ They have consumed huge amounts of resources and stoked speculation of ‘virtual currencies’,” read a Chinese government document dated January 2.

The document has asked local authorities to use means like jacking up power prices, inspecting usage of land and raising issues like environment protection in order to push miners to exit the business.

In addition to this, local bodies have also been asked to report information about mining facilities in their respective regions, and the progress of exits by miners on January 10 and then on the 10th of every month. A separate document issued by the regulator on January 4 asked that the progress be reported on the 5th of every month.

The Chinese government last year banned initial coin offerings in the country and shut down local cryptocurrency exchanges, a move that was endorsed by the country’s central bank as well. The latest crackdown on bitcoin mining comes amid the government’s efforts to better distribute electricity to undersupplied areas.

A report by Quartz pointed out that Beijing has been known to go hard at seemingly risky investment vehicles because it fears the social chaos that could possibly arise from small investors losing money. The government had recently cracked down on other investment vehicles like peer-to-peer lending, online insurance, and a few local commodity exchanges.
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